The Chancellor's upbeat pre-Budget report hides the threat of a new tax on business dividends that will penalise the entrepeneurial owner-manager.
ECA director David Pollock has highlighted a 'sting in the tail' of the pre-Budget report, as the government plans to introduce a new tax on entrepreneurs who opt to take business dividends rather than a salary.

While he praised plans to investigate 147 instances of unnecessary red tape and urged government to look further at stifling bureaucracy, Pollock rallied against the new tax: "A major point of concern is the threat of a new tax on business dividends which could mean that owner-managers will now pay 12.8% National Insurance contributions on their profits," said Pollock.

"Extending National Insurance contributions to dividends could be viewed as just another stealth tax aimed at the entrepreneur; the very person whom the government professes it wants to encourage to increase UK business and enterprise. This is a definite sting in the tail of a supposedly pro-business budget report."

On a more positive note, Pollock applauded the news that the Chancellor is pushing ahead with measures to boost company investment in r&d; the extension of training pilot schemes; and extending the eligibility discount criteria for the Climate Change Levy.

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Electrical and Mechanical Contractor